The purpose of this case is to familiarize the student with the conflicts between price, service, time, and quality that occur when selecting a source. Selecting satisfactory suppliers is one of procurement's major responsibilities, and when done correctly, can lead to optimal trade-offs between the four conflicting factors in a purchase decision. Some important aspects of supplier selection include:
1. Supplier goodwill
2. Assurance of supply
3. Supplier's size
4. Supplier's financial condition
5. Local, national, or international suppliers
6. Management orientation
7. Supplier's record of performance
When there is a good match between the characteristics of the supplier and the needs of the buyer, it is more likely that acceptable cost will result, delivery schedules will be met, quality will be sufficient, and good technical service will be available to the degree necessary. This case is an example of a good match between buyer and seller for most of the parts supplied, and for a very poor match for a few parts. Question 1:
Compare the advantages and disadvantages of staying with Monitor versus switching to the new suppliers. One way for the student to begin this analysis is to itemize the strengths and weaknesses of each supplier. For instance, Monitor's strengths include being an industry leader, offering quality parts at lower costs, having a reputation at Acacia for being a competent supplier in general, and being the only supplier for five of the diodes. Monitor's weaknesses include being so big that his new business was not critical to it, having a bureaucratic, inflexible management, and demonstrating an unacceptably slow response time to change requests.
United's strengths include a real interest in supplying parts to Acacia, a willingness to conform to JIT specifications, being eager enough for the new business that Acacia...